Eyes Set On All-Time High Levels Of 12,431
“If you fall behind, run faster. Never give up, never surrender, and rise up against the odds,”-Jesse Jackson. This is exactly what the bulls have done in the past five trading sessions on D-Street. On Saturday, post the announcement of Budget 2020, it was like a carnage on D-Street as Nifty registered one of the steepest falls in percentage terms since October 5 2018, however, thereafter, Nifty has risen almost four per cent in the last three sessions on the trot. In technical parlance, the last three day’s candlestick pattern till February 5 resembles three white soldiers pattern. The three white soldiers’ candlestick pattern marches upward, creating a staircase-like structure as the price climbs higher and higher.
Coming back to some of the noteworthy announcements in the Budget 2020, it had three themes-Aspirational India, Economic development and a caring society. The biggest news in the Union Budget is undoubtedly the government disinvestment target for FY21, which trebled to Rs 2.1 lakh crore in FY21. For this, it proposed to list LIC, which is a jewel in the crown of all the PSUs. The government estimated the nominal GDP growth at 10 per cent for FY21. Fiscal deficit targets were more realistic-3.5 per cent for FY21 and 3.8 per cent for FY20. Meanwhile, RBI’s MPC in their first meeting post-Budget decided to keep the policy reporate unchanged and preserve the accommodative stance.
During the week, our thesis, that the economy is healing got corroborated as India’s Services PMI expanded to 55.5 in January, a seven-year high and Manufacturing PMI hit multi-year highs. The current corporate earnings season is a mixed bag; however, we expect the earnings to make a smart recovery on the backdrop of improving economic prospects in the coming quarters.
The bulls after such a steep rise, that too, in a short-span of time is well within its right to consolidate for a while and as a healthy consolidation, will build a base for further round of rally. After a healthy consolidation, we expect the markets to resume its uptrend and why are we saying this?! Here are some of the key pointers:
☛ As per the first estimates released for 2019-2020, the Rabi crop production by National Collateral Management Services Limited (NCML), a leading agriculture postharvest management company, indicates record food grain production. Thus, agriculture will meaningfully aid the GDP numbers.
☛Crude prices, which have tumbled on account of the virus outspread, have turned to be a blessing in disguise for the Indian economy.
☛ Markets across the globe have been cheery on the back of efforts by People’s Bank of China (PBoC) to contain the virus and its attempts to protect its economy.
☛ A report suggested that the researchers in China, as well a team in UK, may be on the cusp of finding a treatment of the virus.
☛ Optimism towards the prospect of a re-election of US President Donald Trump as well as of the fact that he has been acquitted by Senate in the impeachment trial.
☛Technically, the index has managed to hold its important long-term moving average of 200-DMA and improved market breadth in the last couple of trading sessions reflecting broader participation.
The market condition is good and the money flow into the markets is expected to remain steady. Interestingly, there are voices predicting a correction in the market. Market correction is always a possibility and I hope our investor friends can use the market correction, as and when it comes, to aggressively buy equities as we are of the opinion that Nifty is set to reclaim its all-time high levels of 12,431.
